Daily Brief Macro: The Best of Hedgeye: Jim Rickards → Why Gold Is Going To $10 and more

• The book discusses new arguments for investing in gold in the modern era, including the threat of cyber financial warfare.
• The hosts discuss the book’s exploration of notable advocates and critics of gold investment, including Milton Friedman and Roubini.
• Emphasizing the new arguments in favor of gold investment in the 21st century alongside traditional reasons

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• Inflation, particularly in housing costs, has been a big theme in recent American life.
• Despite the Fed raising interest rates to fight inflation, rent price growth has been moderating.
• Multifamily housing developers are feeling the strain of higher interest rates and a lack of supply due to decreased activity in the market.

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• All eyes will be on Union Budget 2025 which will be presented by the Hon. Finance Minister on February 1st. 
• As GDP growth has been reducing lately coupled with the FIIs sell offs, focus will be on how the government tackles economic growth while keeping the fiscal consolidation in check.
• We expect a balance between the two and do not expect budget to be highly inflationary. However, a cut in potential revenue could be met with new streams like divestments.

• The Trump administration’s early moves show that Asia will face geopolitical and trade difficulties even if the feared tariff increases did not materialise immediately.
• Despite the lack of major trade restrictions in its early days, the administration remains bent on using such restrictions as a tool to achieve geopolitical objectives. 
• Although ASEAN as a whole will be heavily affected, the impact on individual countries is likely to vary according to their respective trade and defence relations with the US.

• A lack of the Fed’s willingness to cut rates will also be positive for fixed rate bonds.
• We will have rising defaults, rising inflation, and the Fed’s lack of willingness to increase rates, all of which will lead to recession in 2026.
• Trump presidency adds to our confidence that there will be policy uncertainty at least in 2025, which is negative for risky assets but positive for US Dollar assets, in general.

• For the week ending 24/Jan, US crude inventories increased by 3.5m barrels, missing expectations of a 2.2m barrel build. Gasoline stockpiles rose, while distillate stocks fell more than expected.
• US natural gas inventories fell by 321 Bcf for the week ending 24/Jan, beating analyst expectations of a 317 Bcf drawdown. Inventories are 4.1% below the 5-year seasonal average.
• Shell’s Q4 adjusted earnings dropped 38.3% QoQ and 49.9% YoY, missing estimates due to weak margins and oil prices. HSBC raised its PT on Chevron but cut it for Exxon.

• In Apr-Dec’24 (3/4th of FY25), the fiscal deficit was only 56% of the FY25 target, and its 12mma was 4.9% of GDP. Seasonality should bring it to 4.7% by end-FY25.
• PIT, CGST and customs revenue grew 11-22%YoY in CY24. Corporate taxes declined, falling 8.33%YoY in Q2FY25, but recovering to grow 3.34%YoY in Q3FY25. The worst is over for EPS growth. 
• The 4qma of the CAD was 0.6% of GDP in Sep’24; a surplus in Dec’24 likely cut the Q3FY25 deficit further. Seasonality should ensure a FY25 surplus (0.2% of GDP). 

• iSNR (Indian Sustainable Natural Rubber) to deal with EUDR  
• INR Konnect to help idling plantations come alive  
• iSNR to fetch a premium of 10-35% in global markets  

• AI news shocked market pricing at the start of the week, but policy decisions proceeded as planned. The ECB, Riksbank and BoC cut by 25bp, the Fed and Chile skipped a step in this cycle while Brazil jumped up 1pp again as it hurries to unwind premature stimulus.
• The BoE dominates next week’s policy calendar with its likely 25bp cut after skipping in December. We expect two hawkish dissents. Sticky flash Euro area inflation and resilient US payrolls are the most critical data releases topping and tailing the week.
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• A more hawkish interpretation of the data in the statement appears to be more a justification for the FOMC’s decision
• There is still scope for renewed Fed easing if either inflation or labor market data weakens, and we will see two months of employment and CPI data
• The most significant adjustment to the FOMC statement was a removal of a reference to inflation making progress toward the 2% objective.